The rubber hose on the diverter valve rotted out (after only 4 years) and that was the major leak. However after replacing that, I leak tested the unit and found water dripping from one of the nuts that secures the heating element. After examining things carefully, I realized that the original element was either poorly designed or defective. There was no "shoulder" on the inside of the element to give something to pull the rubber gasket down against. This meant that it took VERY little finger pressure to pull the gasket out of alignment and cause leaks.
In researching a replacement, I saw that most new ones DO come with that necesary shoulder, so I figured a replacement was my only option. The job itself was extremely simple - I used a screwdriver to help pop the electrical connectors off, and a crescent wrench to gently snug down the nuts. You'll spend more time moving the unit out and back in than replacing the element.